Capital Gains Manual

Options: taxation

TCGA92/S21 (1)(a), TCGA92/S144

Specific legislation provides that certain disposals which would have been dealt with under the capital gains rules are instead to give rise to income profits or losses. This applies

for Corporation Tax purposes only, where the options fall within the legislation in Part 7 CTA09 (Derivative Contracts). (Or previously, within the legislation in FA02 (Derivative Contracts), or FA94 (Financial Instruments)). See CFM50000+, or

in cases where schemes or arrangements involving the use of options or/and futures are designed to give a guaranteed return, see Chapter 12 Part 4 ITTOIA05 and CG56200. (Or previously, ICTA88/Sch5AA, which applied also for Corporation Tax until such options and futures were brought within the FA02 rules for derivative contracts.)

For capital gains purposes an option is a chargeable asset, see TCGA92/S21 (1)(a). Special rules for the capital gains treatment of options are to be found in TCGA92/S144 to TCGA92/S148.

The guidance at CG12311 onwards addresses the capital gains treatment of options in general.

Guidance on quoted options to subscribe for shares in a company, traded options and financial options is at CG55400 onwards.